Cutting EU Funding


The cuts in structural and cohesion funds and agricultural expenditure, proposed yesterday by the European Commission, have been anticipated for a long time by those who have been following the EU's ambitious plans for continental enlargement. Now that they are on the table, it is to be expected that there should be alarmist claims from those directly affected, that Ireland is being overly discriminated against. It is certainly true that the strong growth in the Irish economy is very recent and has, as yet, made few inroads on a sadly underdeveloped infrastructure which will take another generation to raise to average European levels.

However in assessing this package, it must be allowed that the soft landing promised to this State has been largely adhered to. Much will depend on the forthcoming negotiations as to how these continuing transfers should be best used in the next budgetary period running to 2006.

Within a general and valid Irish concern that insufficient resources are available to cope with a broad and complex EU agenda - including both enlargement and economic management of the single currency - it must be recognised that the Commission has come up with a very skilful set of proposals. They take full account of the general political and economic conditions constraining EU budgetary policy, including the refusal of net donor states to contemplate extra contributions, forthcoming changes in international agricultural policy regulated by the World Trade Organisation and the ability of prospective EU accession states to absorb transitional and developmental funding.

Against a benchmark of preserving intact benefits already accruing to this State, it is not difficult to find these proposals sadly wanting. Unfortunately this is not a realistic option for Irish policy-makers. The structural and cohesion funds have played an important role in developing the Irish economy and preparing it for the single market and the single currency. Their very success in so doing, signals that they have a limited application. Already they represent a smaller proportion of Irish GDP than earlier in this decade but under these proposals their contribution to Ireland's infrastructural development can be optimised with careful planning and negotiation.

As for the Common Agricultural Policy, it must be recognised that the proposals have been dictated by the need to bring EU prices down to world market levels. There is now widespread recognition that agriculture must be competitive on international markets while Irish agriculture remains all too dependent on EU transfers. These proposals continue the MacSharry policy of shifting support from price to income support, from consumers to taxpayers. The Government and the farmers' lobby are well able to protect their interests within this framework, but must not be too surprised at public scepticism about overly alarmist reaction.

In the longer term, Ireland faces a period of greater self-reliance within the EU budgetary framework as growing prosperity takes this State inexorably down the road to net donor status in the period after 2006. Particular attention must be paid to developing the best means of optimising it. Floating proposals for regionalising government structures simply in order to maximise take-ups from structural funds is not good enough. Better, by far, to prepare for the longer term by decentralising structures in line with the Commission's own preferences for more flexible and participatory methods of governance.